Technicals at a critical juncture
Brian Bloom
Nov 12, 2007
If the target of 12,900 in
the latter chart is achieved, and holds, then the Dow will come
to rest above the Dow Theory "sell signal,"
and the first chart will remain bullish.
If it bounces "up"
from that (or any higher) level, the bear market will be avoided
(for the time being)
If it breaks "down" from there then it's all over bar
the shouting.
Will it break up or down?
The market is indecisive - as can
be seen from the following chart of gold divided by the Dow,
which has reached a double top.
If I had to guess, I would
guess that the various markets will bounce rather than break.
(This time around).
Another really worrying chart is this one of Citigroup:
This chart has reached its
measured move based on vertical count
Further, the less sensitive 5% X 3 box reversal shows Citi still
in a bull trend.
The $29 level has to hold.
Will it hold?
Not sure. The following two charts of Fannie Mae and Freddy Mac
suggest not.
Fannie Mae has a measured move
target of $20.94
Freddy Mac has a measured move target of $11.74
If the US property market dies,
it's hard to see how the banks will be able to hold up. If the
banks can't hold up then it's hard to see how the Dow Industrials
will hold up.
Conclusion
Any "bounce" from these levels will likely represent
an opportunity to get out.
The Goldollar Index below suggests that the "inverse"
move between gold and the US Dollar is now shifting to favour
gold.
The "key" question
is whether or not the Euro price of gold will break to a new
high (chart up to date to November 5th 2007)
My "gut feel" (unsubstantiated)
is that if the Dow breaks down, the ratio of Gold:$Indu will
break up and, if that happens, the Euro price of gold will rise
to new highs.
Under those circumstances, we will likely experience
a full blown crisis of confidence in the financial markets.
Probabilities of that happening? Subjectively and unsubstantiated,
60:40
This is no longer an intellectual game. It's real. This is not
business as usual. If the markets collapse, the entire infrastructure
of society will likely come under threat because, for example,
we have passed 'peak oil'. If investment confidence goes, how
will we adapt to that particular problem? Guys, it's not about
making money this time around. It's about survival.
I for one do not want to witness a full blown crisis of confidence.
We absolutely need to hold it all together in order to allow
time for a migration to new energy paradigms.
Brian Bloom
Australia
website: www.beyondneanderthal.com
email: info@beyondneanderthal.com
 Since 1987, when Brian
Bloom became involved in the Venture Capital Industry, he has
been constantly on the lookout for alternative energy technologies
to replace fossil fuels.
Beyond Neanderthal
Brian Bloom's novel Beyond Neanderthal is a factional work
which took over twenty years to research.
Via the medium
of its light hearted storyline, it examines how the world has
gotten itself into the horrific quagmire of economic and social
problems with which we are now faced - and puts forward one possible
course of action on which we might embark to dig ourselves out.
It may be ordered
over the internet via www.beyondneanderthal.com. Or purchased from
Amazon.
321gold Ltd
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